Tuesday, June 16, 2015

The Good and Bad Parts of Online Education: Is online education the solution to widening inequality, rapidly rising costs, and lack of access to high quality courses? Will it lead to the demise of traditional “brick and mortar” institutions? I was initially very skeptical about the claims being made about online education, but after teaching several of these course during the past academic year my own assessment has become much more positive.

My main worry, as expressed in a previous column, was that the availability of online courses degrees would create a two-tiered education system and exaggerate inequality instead of reducing it. I still worry about that, but I didn’t give online education enough credit for the things that it can do. Here are some of the positives and negatives of online versus traditional education gleaned from my experience teaching both types of courses. ...

In 2002, researchers with the National Center for Education Statistics started tracking a cohort of high school sophomores. The project, called the Education Longitudinal Study, recorded information about the students’ academic achievement, college entry, work history and college graduation. A recent publication examines the completed education of these young people, who are now in their late 20s. ...

Thirteen years later, we can see who achieved their goals. Among the participants from the most disadvantaged families, just 14 percent had earned a bachelor’s degree. That is, one out of four of the disadvantaged students who had hoped to get a bachelor’s had done so. Among those from the most advantaged families, 60 percent had earned a bachelor’s, about two-thirds of those who had planned to. ...

And the gap looks just as bad when students with similar academic achievement in high school are compared, e.g. among the "teenagers who scored among the top 25 percent of students on the math test..., the students from the top socioeconomic quartile had very high bachelor’s degree completion rates: 74 percent... But only 41 percent of the poorest students with the top math scores did so. That’s a completion gap of 33 percentage points, not much smaller than the overall gap of 46 percentage points."

Thursday, April 09, 2015

I really hope The Economist is right about this, but I'm a bit more pessimistic:

Economic history is dead; long live economic history?: Two years ago, in a very interesting paper, Peter Temin bemoaned the decline of economic history as a research topic at universities. He took the example of what happened at the Massachusetts Institute of Technology (MIT) to prove his point. There, the subject reached its peak in the 1970s, when three members of the faculty taught economic history. But from then it declined until economic history vanished both from the faculty and the graduate programme around 2010.

But is economic history really dead? Last weekend, Britain's Economic History Society hosted its annual three-day conference in Telford, attempting to show the subject was still alive and kicking. The economic historians present at the gathering were bullish about the future. Although the subject's woes at MIT have been echoed across research universities in both America and Europe, since the financial crisis there has been something of a minor revival.

What revival does the article have in mind?:

renewed vigour can be most clearly seen in the debates economists are now having with each other

The conclusion:

Economic history may well be dead as a subject studied in independent academic departments, as it was at universities in the 1970s. But as a subject that is needed as part of the study of economics and the making of public policy, economic history is—and should be—very much alive.

Wednesday, April 01, 2015

Why More Education Won’t Fix Economic Inequality: Suppose you accept the persuasive data that inequality has been rising in the United States and most advanced nations in recent decades. But suppose you don’t want to fight inequality through politically polarizing steps like higher taxes on the wealthy or a more generous social welfare system.

There remains a plausible solution to rising inequality that avoids those polarizing ideas: strengthening education so that more Americans can benefit from the advances of the 21st-century economy. This is a solution that conservatives, centrists and liberals alike can comfortably get behind. After all, who doesn’t favor a stronger educational system? But a new paper shows why the math just doesn’t add up, at least if the goal is addressing the gap between the very rich and everyone else.

Brad Hershbein, Melissa Kearney and Lawrence Summers offer a simple little simulation that shows the limits of education as an inequality-fighter. In short, more education would be great news for middle and lower-income Americans, increasing their pay and economic security. It just isn’t up to the task of meaningfully reducing inequality, which is being driven by the sharp upward movement of the very top of the income distribution. ...

Sunday, March 22, 2015

Student Loan Debt Is the Enemy of Meritocracy in the US: ...the amount of household debt and even more recently of student debt in the U.S. is something that is really troublesome and it reflects the very large rise in tuition in the U.S. a very large inequality in access to education. I think if we really want to promote more equal opportunity and redistribute chances in access to education we should do something about student debt. And it's not possible to have such a large group of the population entering the labor force with such a big debt behind them. This exemplifies a particular problem with inequality in the United States, which is very high inequality and access to higher education. So in other countries in the developed world you don't have such massive student debt because you have more public support to higher education. I think the plan that was proposed earlier this year in 2015 by President Obama to increase public funding to public universities and community college is exactly justified.

This is really the key for higher growth in the future and also for a more equitable growth..., you have the official discourse about meritocracy, equal opportunity and mobility, and then you have the reality. And the gap between the two can be quite troublesome. So this is like you have a problem like this and there's a lot of hypocrisy about meritocracy in every country, not only in the U.S., but there is evidence suggesting that this has become particularly extreme in the United States. ... So this is a situation that is very troublesome and should rank very highly in the policy agenda in the future in the U.S.

Friday, March 20, 2015

We’re Frighteningly in the Dark About Student Debt, NY Times: ...The ... United States government ... has a portfolio of roughly $1 trillion in student loans, many of which appear to be troubled. The Education Department, which oversees the portfolio, is ... neither analyzing the portfolio adequately nor allowing other agencies to do so.

These loans are no trivial matter... Student loans are now the second-largest source of consumer debt in the United States, surpassed only by home mortgages. In a major reversal, they now constitute a larger portion of household debt than credit cards or car loans. ...

The frightening reality, however, is that we are remarkably ignorant about student debt..., we can’t quantify the risks that student debt places on individual households and the economy as a whole. ...

Over at the Federal Reserve and consumer bureau, as well as outside the government, highly trained analysts are eager for data. A sensible solution would be for the Education Department to put it in their hands and let them get to work.

An additional longer-term solution is to move the loan program out of the Education Department entirely — either into an existing agency that has the statistical expertise or a new student-loan authority. ...

Sunday, March 15, 2015

In case this was missed when it was in the daily links. This is from Tim Taylor:

When a Summer Job Could Pay the Tuition: When I was graduating from high school in 1978, a number of my friends went to the hometown University of Minnesota. At the time, it was possible to pay tuition and a substantial share of living expenses with the earnings from a full-time job in the summer and a part-time job during the school year. Given the trends in costs of higher education and the path of the minimum wage since then, this is no longer true.

Here's an illustration of the point with the University of Minnesota, with its current enrollment of about 41,000 undergraduates,as an example. (The figure is taken from a presentation by David Ernst, who among his other responsibilities is Executive Director of the Open Textbook Network, which provides links to about 170 free and open-license textbooks in a variety of subjects.)

Just to put this in perspective, say that a full-time student works 40 hours per week for 12 weeks of summer vacation, and then 10 hours per week for 30 weeks during the school year--while taking a break during vacations and finals. That schedule would total 780 hours per year. Back in the late 1970s, even being paid the minimum wage, this work schedule easily covered tuition. By the early 1990s, it no longer covered tuition. According to the OECD, the average annual hours worked by a US worker was 1,788 in 2013. At the minimum wage, that's now just enough to cover tuition--although it doesn't leave much space for being a full-time student.

Wednesday, March 04, 2015

Bad news for those who propose education as the solution to inequality:

How Higher Education Perpetuates Intergenerational Inequality, by Tim Taylor: Part of the mythology of US higher education is that it offers a meritocracy, along with a lot of second chances, so that smart and hard-working students of all background have a genuine chance to succeed--no matter their family income. But the data certainly seems to suggest that family income has a lot to do with whether a student will attend college in the first place, and even more to do with whether a student will obtain a four-year college degree.

The report offers a range of evidence that the affordability of college is a bigger problem for students from low-income families even after taking financial aid into account. Students from low-income families take out more debt, and are more likely to attend for-profit colleges. Indeed, a general pattern for higher education a whole is that even as the cost of attending has risen, the share of the cost paid by households, rather than by the state or federal government, has been rising. ...

The effects of these patterns on inequality of incomes in the United States are clearcut: higher income families are better able to provide financial and other kinds of support for their children, both as they grow up, and when it comes time to attend college, and when it comes time to find a job after college. In this way, higher education has become a central part part of the process by which high-income families can seek to assure that their children are more likely to have high incomes, too.

This connection is perhaps underappreciated. After all, it's a lot easier for professors and college students to protest high levels of compensation for the top professionals in finance, law, and the corporate world who are in the top 1% of the income distribution, rather than to face the idea that their own institutions of higher education are implicated in perpetuating inequality of incomes across generations. ...

Tuesday, February 03, 2015

Self-selection and "liberal" professions: Neil Gross stirred up a quite a storm a few years ago when he released a body of research findings on the political complexion of university professors. Conservative organizations and pundits have made hay by denouncing the supposed liberal bias of universities. Gross opens his most recent book, Why Are Professors Liberal and Why Do Conservatives Care?, by confirming that multiple measures demonstrate that faculty members are substantially more likely to be liberal than the general population. But he believes this is both indisputable and uninteresting. What is most interesting for a sociologist is the "why" -- how can we explain the skewed distribution of political identities across this professional group?

Gross positions his work as falling in a tradition of research that included two major survey-based studies in the past 75 years, Lazarsfield and Thielens (The Academic Mind: Social Scientists in a Time of Crisis) and Everett Karll Ladd and Seymour Martin Lipset (The Divided Academy: Professors and Politics). He also finds creative ways of incorporating the GSS surveys. In addition, Gross and Solon Simmons carried out their own substantial survey, the Politics of the American Professoriate survey (PAP).

It will be noted that this is a problem that calls out for a social mechanisms explanation, and a fairly simple one at that. Suppose marbles of two colors in equal numbers are raining down in a thoroughly mixed stream on a pair of urns. Occasionally a marble falls into one urn or the other. When we count the marbles in both urns we find that 65% of the marbles in the urn on the left are green, whereas the larger urn on the right has 50% of each color. How is it that there are a higher percentage of green marbles in the urn on the left? There are only a few possibilities, each corresponding to a different mechanism. (i) The marbles have a degree of choice about which urn they enter, and green marbles have a preference for the left urn. (Or a variant: red marbles have a preference for avoiding the left urn.) We could call this "selection bias by chooser". This is different from two other possible mechanisms: (ii) there is a filter on the left urn, bumping green marbles in and red marbles out ("selection bias by receiver"); or (iii) marbles have a slight tendency to shift color from red to green when they enter the left urn ("environment transformation").

Fundamentally the question is analogous to the "nature-nurture" conundrum in the study of personality. Are universities more liberal than average occupations because they cultivate liberal thinking (nurture)? Or are they more liberal because of some sort of selection mechanism, drawing liberal members more frequently than chance (nature), and liberal-tending new faculty members bring their political values with them? Gross makes a powerful empirical case for the latter possibility.

I develop an alternative account: for historical reasons the professoriate has developed such a strong reputation for liberalism that smart young liberals today are apt to think of academic work as something that might be appropriate and suitable for them to pursue, whereas smart young conservatives see academe as foreign territory and embark on other career paths. (p. 105)

It might be speculated that this distribution exists because the faculty selection process is biased -- conservative candidates are turned away. Gross's explanation is different. He draws on a strong literature studying gendered occupations that finds that the reputation of the profession has a powerful influence on girls and women as they make educational and career choices. Gross extends this reasoning to liberals and conservatives contemplating an academic career. Essentially he explains the political composition of university faculties as a consequence of a powerful public reputation for being a liberal workplace and a distinctly skewed process of self-selection towards this career. The profession is "typed" as being a particularly good career for more liberal young people, and young people make their career choices in consideration of that assumption. Essentially he argues that universities are publicly perceived as being hospitable to people on the left, and liberal-leaning young people are drawn to the career because of this reputation.

The question of political bias within universities is treated using an interesting experiment that Gross and colleagues Joseph Ma and Ethan Fosse conducted to test whether conservative students have a harder time gaining entrance to graduate programs (164). The project involved sending fictitious letters of inquiry to directors of graduate studies in leading departments in a wide range of disciplines. The letters indicated the same level of preparation for the field. One batch indicated no political information about the student, while the other two batches included the phrases "Worked for the McCain campaign" or "Worked for the Kerry campaign." Responses were rated according to the degree of encouragement or discouragement they expressed. The experiment is ingenious but it indicates "no result". There is no statistically significant evidence of bias against applicants who self-identify as conservative. (Gross does report a strong negative response from some of the academics whose potentially discriminatory behavior was tested.)

The study should count as reasonably strong evidence that most social scientists and humanists in leading departments work hard to keep their political feelings and opinions from interfering with their evaluations of academic personnel. (165)

I find Gross's treatment of this topic to be an exemplary use of quantitative survey data in theoretically informed ways. The PAP survey that Gross initiated (along with colleagues and research assistants) provides substantial new information about the political attitudes and social backgrounds of faculty in the United States. Gross makes deft use of this data source (as well as several others) to evaluate hypotheses about what causes the distribution of political profiles among faculty. Gross's question is about both groups and individuals, and the survey data helps to evaluate answers to both. And, incidentally, this appears to be a sterling example of the kind of theoretical work that John Levi Martin calls for (link): careful stipulation of various explanatory theories, accompanied by a rigorous effort to evaluate them using appropriate empirical data.

For anyone who cares about universities as places of learning for undergraduate students, Gross's book is an encouraging one. He provides a clear and convincing explanation of the mechanisms through which a non-random distribution of political attitudes wind up in the population of university and college professors, and he provides strong evidence against the idea that universities and professors exercise discriminatory bias against newcomers who have different political identities. And finally, Gross's analysis and my own experience suggests that professors generally conform to Weber's ethic when it comes to proselytizing for one's own convictions in the classroom: the function and duty of the professor is to help students think for themselves (Max Weber, "The Meaning of Ethical Neutrality,", Methodology of Social Sciences.)

Monday, January 12, 2015

Higher Education, Wages, and Polarization, by Rob Valletta, FRBSF Economic Letter: Holding a four-year college degree gives a worker a distinct advantage in the U.S. labor market. The wage gap between college-educated working adults and those with high school degrees is large and has grown steadily over the past 35 years. This gap appears to be bolstered by technological advances in the workplace, notably the ever-growing reliance on computers, because the skills needed to apply these technologies are often acquired through or associated with higher education. Since 2000, however, this trend has altered. Increasingly, the U.S. labor market favors workers who hold a graduate degree, while the wage advantage for those who hold a four-year college degree has changed little. In this Economic Letter, I examine the potential explanations for this change. I focus on the polarization hypothesis, which emphasizes employment and wage growth at the top and bottom portions of the skill distribution (Acemoglu and Autor 2011). ...

Noah Smith ... takes, Ginther and Kahn's cautious and nuanced results, and leaps to the conclusion that economics "seems to have a built-in bias that prevents women from advancing."

Really?

I have never seen a woman denied tenure when a man with similar number and quality of publications was awarded it. I don't deny Ginther and Kahn's findings, but might there be a non-discriminatory explanation of the fact that a woman in economics with X number of publications is less likely to receive tenure than a man with X publications? ...

She goes on to give the "non-discriminatory explanation", and then says:

"Sexism" is not the result of some high level conspiracy. It is the product of millions of every day actions by thousands of ordinary people. ... If a man with 5 publications gets tenure while a woman with 5 publications does not, there must be a reason: either the man has higher quality publications, or higher impact publications, or more evidence of national or international reputation, or better letters of reference.

But a scholar's reputation and impact is determined by ... others: who they choose to acknowledge, who they choose to network with. Every single active academic can, through the citation and other decisions they make every day, influence other academics' reputations - and thus the probability that they will receive tenure or get promoted.

Who do you cite? If you're like most people, you're more likely to cite the seminal work of some well-known male academic than the work of a female scholar. ...

Do you give women credit for their ideas? Just about every woman has had the experience of sitting in a committee, saying something, and having her contribution ignored. A man will then restate her point, and he is listened to, and receives credit for the idea. ...

How do you word your letters of reference? Do you use the same adjectives to describe women and men? Or are women delightful, pleasant, conscientious and hard-working while men are strong, original, insightful and persistent?

Who do you invite to present at conferences or departmental seminars? If a man, do you turn down invitations to participate in conferences with all-male line-ups...? Do you make it easy for female colleagues to come for a drink in the bar after a seminar by corralling them into the bar-going group?

The economics profession is far from perfect. I personally don't find it any worse than the world of media (that the Globe and Mail paid Stephen Gordon more than me still burns), or the world of academic administration. But it could be better - and the power to change it lies within every one of us.

Wednesday, October 29, 2014

Is (teaching) Economics doing more harm than good?: Every September thousands of students enter into universities and institutes of higher education. A large number of these take some economics courses. ... Economists also typically teach courses such as statistics, or introductory mathematics for social scientists. And yet, we have no idea whether or not this does any good. Much worse, we have no idea whether or not this does harm. Maybe we should find out? ...

He goes through a large body of evidence showing that "Economists are different," and how student attitudes may be changed by taking economics courses.

Thursday, October 16, 2014

Thoughts on High-Priced Textbooks: High textbook prices are a pebble in the shoe of many college students. Sure, it's not the biggest financial issue they face, But it's a real and nagging annoyance that for hinders performance for many students. ...

David Kestenbaum and Jacob Goldstein at National Public Radio took up this question recently on one of their "Planet Money" podcasts. ... For economists, a highlight is that they converse with Greg Mankiw, author of what is currently the best-selling introductory economics textbook, which as they point out is selling for $286 on Amazon. Maybe this is a good place to point out that I am not a neutral observer in this argument: The third edition of my own Principles of Economics textbook is available through Textbook Media. The pricing varies from $25 for online access to the book, up through $60 for both a paper copy (soft-cover, black and white) and online access.

Several explanations for high textbook prices are on offer. The standard arguments are that textbook companies are marketing selling to professors, not to students, and professors are not necessarily very sensitive to textbook prices. (Indeed, one can argue that before the rapid rise in textbook prices in the last couple of decades, it made sense for professors not to focus too much on textbook prices.) Competition in the textbook market is limited, and the big publishers load up their books with features that might appeal to professors: multi-colored hardcover books, with DVDs and online access, together with test banks that allow professors to give quizzes and tests that can be machine-graded. At many colleges and universities, the intro econ class is taught in a large lecture format, which can include hundreds or even several thousand students, as well as a flock of teaching assistants, so some form of computerized grading and feedback is almost a necessity. Some of the marketing by textbook companies involves paying professors for reviewing chapters--of course in the hope that such reviewers will adopt the book.

The NPR show casts much of this dynamic as a "principal-agent problem," the name for a situation in which one person (the "principal") wants another person (the "agent") to act on their behalf, but lacks the ability to observe or evaluate the actions of the agent in a complete way. Principal-agent analysis is often used, for example, to think about the problem of a manager motivating employees. But it can also be used to consider the issue of students (the "principals") wanting the professor (the "agent") to choose the book that will best suit the needs of the students, with all factors of price and quality duly taken into account. The NPR reporters quote one expert saying that the profit margin for high school textbooks is 5-10%, because those books decisions are made by school districts and states that negotiate hard. However, profit margins on college textbooks--where the textbook choice is often made by a professor who may not even know the price that students will pay--are more like 20%.

The NPR report suggests this principal-agent framework to Greg Mankiw, author of the top-selling $286 economic textbook. Mankiw points out that principal-agent problems are in no way nefarious, but come up in many contexts. For example, when you get an operation, you rely on the doctor to make choices that involve costs; when you get your car fixed, you rely on a mechanic to make choices that involve costs; when you are having home repairs done, you rely on a repair person or a contractor to make choices that involve costs. Mankiw argues that professors, acting as the agents of students, have legitimate reason to be concerned about tradeoffs of time and money. As he notes, a high quality book is more important "than saving them a few dollars"--and he suggests that saving $30 isn't worth it for a low-quality book.

But of course, in the real world there are more choices than a high-quality $286 book and a low-quality $256 book. The PIRG student surveys suggest that up to two-thirds of students are avoiding buying textbooks at all, even though they fear it will hurt their grade, or are shifting to other classes with lower textbook costs. If a student is working 10 hours a week at a part-time job, making $8/hour after taxes, then the difference between $286 book and a $60 book is 28.25 hours--nearly three weeks of part-time work. I am unaware of any evidence in which students were randomly assigned different textbooks but otherwise taught and evaluated in the same way, and kept time diaries, which would show that higher-priced books save time or improve academic performance. It is by no means obvious that a lower-cost book (yes, like my own) works less well for students than a higher-cost book from a big publisher. Some would put that point more strongly.

A final dynamic that may be contributing to higher-prices textbooks is a sort of vicious circle related to the textbook resale market. The NPR report says that when selling a textbook over a three-year edition, a typical pattern was that sales fell by half after the first year and again by half after the second year, as students who had bought the first edition resold the book to later students. Of course, this dynamic also means that many students who bought the book new are not really paying full-price, but instead paying the original price minus the resale price. The argument is that as textbooks have increased in price, the resale market has become ever-more active, so that sales of a textbook in later years have dwindled much more quickly. Textbook companies react to this process by charging more for the new textbook, which of course only spurs more activity in the resale market.

A big question for the future of textbooks is how and in what ways they migrate to electronic forms. On one side, the hope is that electronic textbooks will offer expanded functionality, as well as being cheaper. But this future is not foreordained. At least at present, my sense is that the functionality of reading and taking notes in online textbooks hasn't yet caught up to the ease of reading on paper. Technology and better screens may well shift this balance over time. But even setting aside questions of reading for long periods of time on screen, or taking notes on screen, at present it remains harder to skip around in a computerized text between what you are currently reading and the earlier text that you need to be checking, as well as skipping to various graphs, tables, and definitions. To say it more simply, in a number of subjects it may still be harder to study an on-line text than to study a paper text.

Moreover, as textbook manufacturers shift to an on-line world, they will bring with them their full bag of tricks for getting paid. The Senack report notes:

Today’s marketplace offers more digital textbook options to the student consumer than ever. “Etextbooks” are digitized texts that students read on a laptop or tablet. Similar to PDF documents, e-textbooks enable students to annotate, highlight and search. The cost may be 40-50 percent of the print retail price, and access expires after 180 days. Publishers have introduced e-textbooks for nearly all their traditional textbook offerings. In addition, the emergence of the ereader like the Kindle and iPad, as well as the emergence of many e-textbook rental programs, all seemed to indicate that the e-textbook will alter the college textbook landscape for the better. However, despite this shift, users of e-textbooks are subject to expiration dates, on-line codes that only work once, page printing limits, and other tactics that only serve to restrict use and increase cost. Unfortunately for students, the publishing companies’ venture into e-textbooks is a continuation of the practices they use to monopolize the print market.

Tuesday, September 30, 2014

The silver lining in falling college enrollment, by Mark Thoma: College enrollment "declined by close to half a million (463,000) between 2012 and 2013, marking the second year in a row that a drop of this magnitude has occurred," according to a report from the Census Bureau. And it's the largest two-year drop since Census began collecting enrollment data in 1966. Notably, the decline was concentrated in two-year colleges.

It is, of course, desirable to have a more educated population, particularly in an era of globalization and technological change that makes it harder for low-skilled workers to find good jobs. But the report also has a silver lining. ...

Wednesday, September 10, 2014

A Simple Equation: More Education = More Income, by Eduardo Porter, NY Times: ...the gap between the wages of a family of two college graduates and a family of high school graduates..., between 1979 and 2012...,grew by some $30,000, after inflation. This ... amounts to a powerful counterargument to anybody who doubts the importance of education in the battle against the nation’s entrenched inequality.

But in the American education system, inequality is winning, gumming up the mobility that broad-based prosperity requires. ... Only one in 20 Americans aged 25 to 34 whose parents didn’t finish high school has a college degree. The average across 20 rich countries in the O.E.C.D. analysis is almost one in four. ...

Given the payoff, the fact that many of those who would benefit most are not investing in a college education suggests an epic failure. And the growing cadre of countries that outperform the United States suggests failure is hardly inevitable. ...

Mr. Schleicher told me that, while places like Japan, Singapore and Canada have learned how to educate socially disadvantaged children, in the United States social background plays an outsize role in the educational outcomes. ... “But a lot depends on policy. There is a lot we can do.”

Monday, July 21, 2014

The Wage Growth Gap for Recent College Grads, by Bart Hobijn and Leila Bengali, FRBSF Economic Letter: Starting wages of recent college graduates have essentially been flat since the onset of the Great Recession in 2007. Median weekly earnings for full-time workers who graduated from college in the year just before the recession, between May 2006 and April 2007, were $653. Over the 12 months ending in April 2014, the earnings of recent college graduates had risen to $692 a week, only 6% higher than seven years ago.

The lackluster increases in starting wages for college graduates stand in stark contrast to growth in median weekly earnings for all full-time workers. These earnings have increased 15% from $678 in 2007 to $780 in 2014. This has created a substantial gap between wage growth for new college graduates and workers overall.

In this Economic Letter we put the wage growth gap in a historical context and consider what is at its heart. In particular, we find that the gap does not reflect a switch in the types of jobs that college graduates are able to find. Rather we find that wage growth has been weak across a wide range of occupations for this group of employees, a result of the lingering weak labor market recovery. ...

Monday, June 30, 2014

At macroblog, Julie L. Hotchkiss, a research economist and senior policy adviser at the Atlanta Fed, and Fernando Rios-Avila, a research scholar at the Levy Economics Institute of Bard College look at the relationship betwen education and inequality:

... There is little debate about whether income inequality has been rising in the United States for some time, and more dramatically recently. The degree to which education has exacerbated inequality or has the potential to reduce inequality, however, offers a more robust debate. We intend this post to add to the evidence that growing educational attainment has contributed to rising inequality. This assertion is not meant to imply that education has been the only source of the rise in inequality or that educational attainment is undesirable. The message is that growth in educational attainment is clearly associated with growing inequality, and understanding that association will be central to the understanding the overall growth in inequality in the United States.

In a recent Economic Synopses essay, Alexander Monge-Naranjo, research officer and economist with the Federal Reserve Bank of St. Louis, examined the recent growth in student loan debt in the U.S. over the period 2005-2012. As of March 2012, student loan debt stood at $870 billion and had surpassed total credit card debt ($693 billion) and total auto loan debt ($730 billion).

In addition, Monge-Naranjo found that the distribution of student loans by debt levels had shifted, with the share of borrowers with loan balances in excess of $10,000 increasing. Increases were greater at higher levels of debt:

Only 3 percent of borrowers in 2005 owed more than $100,000. By 2012, that fraction reached 6.2 percent.

The share of borrowers who owed between $150,000 and $175,000 rose from 1.7 percent to 3.7 percent.

The share who owed between $175,000 and $200,000 went up from 0.6 percent to 1.5 percent.

The share of those owing more than $200,000 went up from 0.2 percent to 0.6 percent.

While Monge-Naranjo noted that “high levels of student loan debt pose no problems as long as the investment in education has high returns and the loans are repaid,” he also indicated that some borrowers may suffer adverse effects in the future, such as difficulty obtaining other forms of credit.

Thursday, May 08, 2014

As a follow-up to the previous post on black-white differences in economic mobility:

Higher Ed Cuts, Tuition Hikes Worsen Low-Income Students’ Struggles: State cuts to higher education have led colleges and universities to make deep cuts to educational or other services, hike tuition sharply, or both, as we explain in our recently released paper. These tuition increases are hitting low-income students particularly hard, lessening their choices of schools, adding to their debt burdens — and likely deterring some from enrolling in school altogether. ...

I am sympathetic to some of the arguments made in those posts and the need for some serious rethinking of the way economics is taught but I would put the emphasis on slightly different arguments. First, I am not sure the recent global crisis should be the main reason to change the economics curriculum. Yes, economists failed to predict many aspects of the crisis but my view is that it was not because of the lack of tools or understanding. We have enough models in economics that explain most of the phenomena that caused and propagated the global financial crisis. There are plenty of models where individuals are not rational, where financial markets are driven by bubbles, with multiple equilbria,... that one can use to understand the last decade. We do have all these tools but as economics teachers (and researchers) we need to choose which ones to focus on. And here is where we failed. And we did it before and during the crisis but we also did it earlier. Why aren't we focusing on the right models or methodology? Here is my list of mistakes we do in our teaching, which might also reflect on our research:

Saturday, April 26, 2014

Greening Economics: It is time, by Carlo Carraro, Marianne Fay, Marzio Galeotti, Vox EU: ... It took the deepest economic and financial crisis since the Great Depression to provoke an open debate amongst macroeconomists as to whether the ‘economic model’ taught in economics programs is adequate. We do hope it will not take the full realization of the adverse consequences of climate change for the profession to come to its senses regarding environmental economics and the way natural capital is ignored in most macroeconomic work. How many superstorm Sandys will it take? By how much does the sea level have to rise? How many severe droughts and floods (and where) will it take before we come to the realization that ignoring natural capital and its many externalities is simply bad economics?

The difference between the financial and environmental crisis is that we actually do have a good body of work that incorporates natural capital in models of growth. The problem is that it has remained to a large extent the restricted domain of environmental economists. The vast majority of us were able to get degrees in economics without ever reading a single paper on environmental economics or encountering natural capital as an argument in the production functions we studied. We did hear about Pigouvian taxes of course – and so figured the problem had been solved…

Environmental economists have long modified growth models to account for the role of the environment, thus revisiting the conditions that ensure growth, whether sustainable or sustained. Classical references are three 1974 articles by Partha Dasgupta and Geoffrey Heal, by William Nordhaus, and by Robert Solow (though Solow could be hardly defined an environmental economist). More generally, existing work is summarized in the survey chapters by Tasos Xepapadeas and by William Brock and Scott Taylor, both published in 2005. A more recent example that compares ‘traditional’ (brown?) and ‘green’ models of growth is a 2011 World Bank working paper by Stephane Hallegatte, Geoffrey Heal, Marianne Fay, and David Treguer.

As a result, environmental economists tend not to talk about economic growth per se, but about sustainable economic growth. When macroeconomists refer to sustainable growth, however, they usually mean sustained growth. When growth economists study the role of externalities in the growth process they almost exclusively refer to technological and knowledge externalities, and generally ignore environmental ones, even though the latter are likely to become largely more relevant in the coming decades. Even social capital, a relative newcomer in economics, appears better integrated into the growth literature.

Why such disregard for an issue that epitomizes market failures from externalities, common property issues, and whose importance in both growth processes and human well-being is well documented? Sheer ignorance, likely – or a vague notion that innovation will come to the rescue. But why would markets generate the technology to solve a problem that combines both knowledge and environmental externalities?

The teaching of economics

Here is a plea then for an urgent change in the economics curriculum, at both introductory and advanced levels. Growth chapters in today’s macroeconomics textbooks make no reference to the environment – whether as an input into the production function or as a limiting factor affecting the productivity of human or physical capital. This is the case, for example, of David Romer’s textbook, in its fourth edition in 2011; of Jean-Pascal Benassy’s 2011 volume; or those of the Chicago School economists, such as Nancy Stokey, Robert Lucas and Edward Prescott’s (1989) and of Lars Ljungqvist and Thomas Sargent (third edition, 2012); or even that of Neo-keynesian economists such as Olivier Blanchard and Stanly Fischer (1989); or, finally, the very recent example of Michael Wickens (2012).

What is needed is not simply that more environmental economics be offered, but rather that the macroeconomics courses teach that natural capital is a key input into production processes, and that the environment – through massive mismanagement and a chronic failure to apply the basic principles of economics – has now become a serious macroeconomic problem, one that requires a profound and dramatic change in our model of growth. The development model of the industrial revolution (‘grow now and clean up later’) partly worked for a world of 1.5 million people; it simply won’t do for a global population approaching 9 billion.

If introducing the notion and role of the environment is necessary in macroeconomics teaching, it is a fortiori necessary when the student is presented with the theory and models of economic growth. There are a few economic growth textbooks written by well-known growth economists who are very active in that area. Going through the tables of contents, however, one is quickly disappointed. Neither the volume by Robert Barro and Xavier Sala-i-Martin (2003) nor the one by Daron Acemoglu (2008), for instance, consider explicitly the role of the environment in the process and in the perspectives of economic growth of a country. The same holds for the textbook by Olivier de la Grandville (2009), while Charles Jones and Dietrich Vollrath (2013) include a chapter on economic growth and natural resources, which is only a component of natural capital. Only the book by Philippe Aghion and Peter Howitt (2008) includes a chapter – the sixteenth – where the authors study ‘how new growth theories can integrate the environmental dimension, and in particular how endogenous innovation and directed technical change make it possible to reconcile the sustained growth objective with the constraints imposed by exhaustible resources or the need to maintain the environment’ (p.377).

It is remarkable that all textbooks on which undergraduate and graduate students learn the fundamental of economic growth invariably include a chapter on the role of human capital and of technological change, but always miss addressing the issue of the environment and natural capital.

As we believe that it is time to stop teaching that economic growth is uniquely measured by the growth of the production of all goods and services, we also firmly believe that the time has come to teach – from the first steps – that economic growth cannot abstract from the explicit consideration of the constraints and opportunities imposed by the environment and natural exhaustible resources. It is clear from many recent assessments (including the recently released IPCC Fifth Assessment Report) that environmental externalities, constraints on natural resources, and climate change – largely a macro problem – will constantly and deeply affect mankind’s future. The teaching of economics can no longer ignore it.

The paper is interested in what the effect of MOOCs or, in general, web-based teaching options would be on educational outcomes around the world, the distribution of those outcomes and the wages of teachers. ...

So the problem is really twofold: Women have been discouraged and
excluded, and those who make an impact anyway have had their contributions
discredited. ...

So that’s the state of play. That said, women have made huge gains in the
field over the past 40 years..., 35 percent of new economics Ph.D.’s are women, up from about 7
percent in the 1970s.

Dig a little deeper, though, and the signs are less encouraging. ...

A disproportionate number of women remain stuck in certain subfields. ... Women are drawn to
those areas where they are already better represented. So while there are
pockets of female economists within certain subfields, there’s still a major
disparity across the field as a whole. ...

In the coming months, I’ll write more about what this all means, for
women and for the field as a whole. For now, I won’t delve too deeply into
my experiences as an openly feminist economist and the eye-rolls I get from
some of my peers whenever I suggest we hold more lectures and classes on
feminist economics. Discussing that subfield just opens up a whole other can
of worms, except yuck, girls don’t like worms.

This should be an interesting series.

Twenty-eight percent of
our sample of AERE members are women and there are some gender differences
on some of the items... I'm not sure where environmental and resource economics falls in the quant to
caring field range. Probably closer to caring? Since we *might* care more about
environmental issues than other economists?

Wednesday, October 23, 2013

Climate Change, Public Policy, and the University, by Robert Stavins:
Over the past year or more, across the United States, there has been a
groundswell of student activism pressing colleges and universities to divest
their holdings in fossil fuel companies from their investment portfolios.
On October 3, 2013, after many months of
assessment,
discussion, and debate, the President of Harvard University,
Drew Faust, issued
a long, well-reasoned, and – in my view – ultimately sensible
statement on “fossil
fuel divestment,” in which she explained why she and the Corporation
(Harvard’s governing board) do not believe that “university divestment from
the fossil fuel industry is warranted or wise.” I urge you to read
her statement,
and decide for yourself how compelling you find it, and whether and how it
may apply to your institution, as well.

I agree with these students that fossil-fuel divestment by the University
would not have financial impacts on the industry, and I also agree with
their implication that it would be (potentially) of symbolic value only.
However, it is precisely because of this that I believe President Faust made
the right decision. Let me explain. ...

Wednesday, October 09, 2013

Higher Education and the Opportunity Gap, by Isabel V. Sawhill, Brookings:
America faces an opportunity gap. Those born in the bottom ranks have
difficulty moving up. Although the United States has long thought of itself
as a meritocracy, a place where anyone who gets an education and works hard
can make it, the facts tell a somewhat different story. Children born into
the top fifth of the income distribution have about twice as much of a
chance of becoming middle class or better in their adult years as those born
into the bottom fifth (Isaacs, Sawhill, & Haskins, 2008). One way that
lower-income children can beat the odds is by getting a college degree.[1]
Those who complete four-year degrees have a much better chance of becoming
middle class than those who don’t — although still not as good of a chance
as their more affluent peers. But the even bigger problem is that few
actually manage to get the degree. Moreover, the link between parental
income and college-going has increased in recent decades (Bailey & Dynarski,
2011). In short, higher education is not the kind of mobility-enhancing
vehicle that it could be. ...

Monday, October 07, 2013

I am attaching a paper co-authored with two former students that uses
California higher ed data to make stylized calculations of the return and
risk of pursuing a BA. The paper makes two main points.

Most studies of the rate of return to college use a best-case scenario in
which students earn a degree with certainty in four years. More realistic
calculations that account for students who take more than four years and
students who drop out without a degree, etc. result in an average rate of
return that is lower than it was in 2000 but still exceeds the interest
rate on unsubsidized Stafford student loans – i.e. college remains a
good investment by the normal criteria.

Most studies present an average rate of return without considering the
investment’s risk. Over the last decade, rising tuition and deteriorating
earnings for new college graduates (particularly at the bottom of the
distribution) have increased the risk of pursuing a BA – e.g. the risk that
a graduate at age 30 will have student loan payments that exceed 15% of
their income. This growing risk is one explanation for increased
skepticism about the value of a college degree despite the apparently high
rate of return. It also underlines the importance of students becoming
aware of the government’s income contingent loan repayment plans.

Tuesday, July 30, 2013

In almost every high income country, the share of 25-34 year-olds with
higher education is higher than that for the age 25-64 population as a
whole--about 7 percentage points higher. This is the pattern one would
expect to see if a country is expanding access to higher education. But the
U.S. is an exception, where the share of 25-34 year-olds with with a
tertiary education degree is lower than for the age 25-64 population.

Tuesday, July 09, 2013

Liberal Peking University professor threatened with expulsion, South China
Morning Post: A renowned professor has confirmed online rumors that his
peers will decide whether he will be expelled from China's most eminent
university after he made a series of remarks in favor of free speech and
constitutional governance. Economics professor Xia Yeliang of Peking
University was told by his department that his fate would be decided by a
faculty vote, he told the South China Morning Post on Monday. "They told me
it's because of all the things I have said and written," Xia said. "They
have threatened me before, but this is the first time they will vote on my
expulsion."

Over the last years, Xia has been one of the most outspoken liberal voices
among Chinese academics. A friend of imprisoned Nobel Peace Prize laureate
Liu Xiaobo, he was among the first signatories of Charter 08, the call for
personal freedoms that landed Liu in jail. ...

I wanted to link to his Twitter account, but I couldn't find it:

... Recently, he has been writing critical remarks - on Twitter and Sina
Weibo - about party censorship and President Xi Jinping's "Chinese Dream"
slogan.

Several, at least seven he said, of his Sina Weibo accounts have been
deleted...

Saturday, June 08, 2013

Just a quick note to say how impressed I've been with the progress that
The Toulouse School of
Economics (TSE) has made in attracting first-rate scholars to their program.
They have an excellent department -- I didn't realize how excellent it was until
I got here (which, I suppose, was part of the reason to bring me here to the TIGER forum). I talked
to Olivier Blanchard a bit about the progress that Europe more generally has
made in economics, and he told me that there were some fairly special conditions
that allowed Toulouse to make such great progress, and he also cited a few other
universities that have also made large strides (again, also due to special
conditions, in particular having advocates within the bureaucratic structure).

But, special conditions or not, it is clear that Europe is making more progress
than I was aware of, and it has attracted far more high powered brain power in
macroeconomics than I realized (it is highly probable that the same is true in
microeconomics, but since I mainly attended the macrofinance seminars at this
conference, I can't speak to that first-hand -- but all the evidence points
strongly in that direction). The sessions I attended were every bit as good as
any NBER session, and the gains that Europe is making is an encouraging
development. If the universities that have made the greatest strides continue to
be successful, then perhaps lessons will be learned and it won't be necessary to
exploit special conditions to the same degree in order for European universities
to prosper academically (though there are significant institutional hurdles).

Toulouse itself is also a wonderful place to visit, and some of the
sessions/dinners were hold in awesome places (e.g. Trichet's talk was at at the
Augustins museum). The hospitality has been unsurpassed (thanks to Paul
Seabright for all the tips about places to visit while I'm here, this is my
first time to France so I really appreciated that and am taking full advantage
of his suggestions). If you get a chance to attend this conference, go for it!
I'm looking forward to returning in 2014 (this was their first attempt, and it
will only get better in future years).

With most American students enrolling in their states’ public institutions
in hopes of gaining affordable degrees, the new data shows that the net
price – the full cost of attending college minus scholarships – can be
surprisingly high for families that make $30,000 a year or less.

The numbers track with larger national trends: the growing student-loan debt
and decline in college completion among low-income students.

Because of the high net price, “these students are left with little choice
but to take on heavy debt loads or engage in activities that lessen their
likelihood of earning their degrees, such as working full time while
enrolled or dropping out until they can afford to return,” Stephen Burd
wrote in a recent report for the New America Foundation...

There's a graphic in the article that shows the "Average net annual cost of
public 4-year schools for in-state students in families earning $30,000" (scroll
over a state to see the cost). For Oregon, it's $10,701 according to their
calculations.

Saturday, March 09, 2013

College Costs & Enrollment for Low-Income Students, by Owen Zidar: According to data compiled by Avery & Hoxby, effective college costs are much lower for low income families at the most selective schools compared to other schools. Despite this fact, many low income students aren’t applying to the most selective schools and end up getting lower quality education and higher student debts on average. This outcome compounds a previously mentioned problem that many potentially high scoring students don’t take the SATs and don’t end up enrolling in college at all. …

Only 12 states now spend more on higher education than they did before the
recession. The decrease in funding has contributed to the six-fold increase in
college tuition over the last 30 years.

A six-fold increase? Let’s be fair – consumer prices today are about 2.5
times what they were 30 years ago – so in real terms, college tuition is up by a
factor of 2.5 or so. But OK – this is a staggering increase. Mark Thoma
highlighted this as well and is getting some comments doubting that government
support for education has declined. This table labeled
“Table 3.15.6. Real Government Consumption Expenditures and Gross Investment by
Function, Chained Dollars” shows that in real terms (2005$), total government
spending on education was $690 billion in 2009 but was only $648 billion in
2011. I know that the austerity freaks in the Republican Party want to claim
reducing government spending is good for growth but they are wrong on two
fronts. Any fiscal restraint now prolongs this Great Recession. And this kind of
austerity impairs the creation of human capital needed for long-term growth. It
is not just the cutbacks in higher education that concern me but the general
tendency for state and local governments to layoff teachers in order to balance
their budgets.

Average tuition costs – the amount students paid in tuition and fees
after state and institutional aid was taken into account — rose
by 8.3% to an average of $5,189 in the 2011-12 school year ,the State Higher
Education Executive Officers Association reported. In the previous academic
year, students paid an average of $4,793.

At the same time, state and
local funding for operating expenses, research and student aid fell by 9% to
$5,896, the lowest level in 25 years, said
association president Paul Lingenfelter.

The upward trend is likely to continue in 2013, since state governments plan
to spend 10.8
percent less on higher education
this year than they did in the year prior to the Great Recession. ... The
decrease in funding has contributed to the six-fold increase in college tuition
over the last 30 years. ...

Saturday, February 09, 2013

Without college, I'd probably be doing what my dad, brother, and grandfather did, work in a tractor store selling parts, and if I was lucky, some day get promoted to sales. College was my ticket out of the small farming town I grew up in, but if it wasn't for the low tuition at California state schools at the time, I probably wouldn't have made it. (Tuition was around $100 per semester, and I could earn enough to pay tuition, dorm fees, etc. working on farms in the summer and at a tractor store selling parts to cranky farmers during school. I also worked at a gas station for a while at minimum wage, and my boss/owner was a real, genuine ass, but I needed the money).

I can't say if it was worth it to society to subsidize my education -- this blog is one result of that investment -- but it was certainly worth it to me and to this day I have not forgotten what the state of California did for me. (I really, really, hated working at tractor stores and the gas station, nobody should have the power over people my boss at the gas station had over me -- he tried to screw me out of overtime, that sort of thing, though once I threatened to report him to the labor board his tune changed a bit -- and the thought of doing jobs like that for the rest of my life was a huge motivation in college. When I'd get to the tractor store in the morning, I'd write "480" on a notepad, that was how many minutes I had left until I could leave eight hours later, and then I'd tick the minutes off the rest of the day. I can remember just wanting one thing, to have a job where I didn't watch the clock all day long, to get lost in my work somehow -- it's hard to explain how much I hated those jobs -- and I was lucky enough to find that.)

I am biased from my own experience, but nobody will ever convince me that college is a bad investment. However, with tuition rising, access to college for naive kids like I was back then is a real issue. It's hard to explain just how naive I was, but when your parents only went to junior college for a year (and then got married at age 19 because you were on the way), and your high school is too small to have advisors to fill in the gaps, it's easy to make bad choices. I had no clue, for example, about how to finance education at a UC school, e.g UC Davis or Berkeley -- my parents simply said "we can't afford that" when I raised the issue, and with no co-signers for loans, and no knowledge about how to get a loan without a parent to co-sign -- it was different then -- the path to anywhere but Cal State Chico was, as far as I could see, closed. I might have found a way if Chico hadn't been so cheap, it would have gone through a JC, but likely not, and I am very grateful there was a path through a four year college for kids like me to take. Still, it was hard to get to a decent graduate school from Chico despite a economics/statistics/math major and nearly perfect grades my last three years, a UC school would have provided much more opportunity, but it was enough to get me here. I only hope that kids today have at least the same opportunity I had, and hopefully even better choices, but I'm not at all sure that they do:

Those are crucial questions at a time of rising student debt and high
unemployment. But a group of scholars and policymakers at an MIT forum on
Thursday suggested that one thing about college remains clear: Expensive
though it can be, higher education pays off for Americans as a whole.

Indeed, the much-discussed idea of an “education bubble” — that college
costs have soared too high to make a degree worthwhile — is a “dangerous
myth that leads people to make bad choices,” said David Autor, an MIT labor
economist who has extensively studied the relationship between education and
earnings.

Instead, Autor said, the best evidence shows that a college degree leads to
a lifetime earnings increase of $250,000 to $300,000, even after subtracting
the cost of higher education. Those returns, Autor noted, apply to graduates
regardless of their undergraduate majors: Humanities students benefit just
as science, engineering or business students do.

And all evidence suggests education remains a key to social mobility in
America, noted Janice Eberly... Moreover, Eberly said, “These benefits
accrue not only to individuals but society more broadly,”...

The forum’s moderator and organizer, James Poterba ... noted in his
introductory remarks that higher education is “an extremely important sector
of the U.S. economy,” representing about 3.5 percent of the national GDP —
but one with an even larger impact on the country’s fortunes, given its
centrality of knowledge and its impact on innovation-based growth to the
economy.

Yet excellence in higher education requires a solid foundation of secondary
education, observed Claudia Goldin, an economist at Harvard University. And
while high school graduation rates in the United States soared in the first
half of the 20th century, they have been virtually stagnant since about
1970.

“College completion just cannot advance much when high school completion
does not,” Goldin said.

For those who do go to college, the amount of student-loan debt they accrue
has increased, as Autor acknowledged: At graduation, today’s
public-university graduates hold $32,000 in student debt, on average, while
graduates of private, nonprofit schools owe $46,000, on average. Going into
debt always entails risk, Autor said, while asserting that the worst-case
scenarios, of students with massive debt and low income, attract
disproportionate media attention.

In reality, virtually all college students, Autor said, will emerge with
useful work-force skills. ...

Thursday, October 25, 2012

... My basic thought ... is that the paradigm college experience is just plain going
to cost a lot. Four years being a full-time student at a residential college,
say. That’s not going to come cheap. We shouldn’t beat our brains out about how
we can do this thing inexpensively... There isn’t some conspiracy to
artificially inflate the cost of college. We could do different things.
That might cost less. ... But there isn’t any reason to think we can do
substantially the same things we already are, just at much lower cost. This is
clearly a source of sincere disagreement... Some people think that the rate at
which college costs have gone up means that there must be some way to
pop the cost bubble and dramatically lower costs back down without sacrificing
quality. There’s some conspiracy of incompetence or venality by the
administrators/teachers. We need to break the back of that, whatever it
is, then things would get better. I don’t really think that’s plausible, but if
you think it’s plausible, go ahead and work out your own solution to the problem
along those lines.

College is a premium product. A costly good. But a valuable one we want people
to have. If the state isn’t going to subsidize its provision, making it
available to all, then how will it go?

Option 1: everyone who isn’t rich goes into serious debt to pay for this costly
but valuable good.

Option 2: we devise a less premium product. It won’t be as good, but it will
cost less.

I distrust Option 1. In fact, I’m paranoid about it, for reasons
outlined in this article. I
don’t quite drink the full jug of kool-aid. For example, I don’t buy that
tuition has skyrocketed ‘because it can’. That is, there’s just a speculative
bubble, in effect. I don’t think the growth in administration is quite as
sinister as they suggest. It’s largely a function of universities wanting to do
so much for students – so many programs and options and choices – which is a
good thing. But it creates overhead costs.

I do agree that private for-profit outfits like University of Phoenix are, in
effect, trying to get their noses into the huge trough of student loan money.
That’s worrisome. The old are eating their young, leaving them holding the debt
bag [pardon my mixed metaphor]. I am less worried by things like Western
Governors University, which seems genuinely committed to trying to find a way to
Option 2. Which makes me sad, but at least it isn’t some private sector trick to
saddle students with debt. At least it’s an attempt to keep the democratic ideal
of higher education for all alive, even if the dream looks pretty
shabby.

Western Governors gives up the dream of a well-rounded liberal arts education.
It gives up all the stuff that you can only do hands-on, in person. It gives up
college as a formative social experience. It gives up a lot. But what it
provides is worth something, and it’s not clear they are charging more than it
is worth. It just makes me depressed to look at it, is all. But I can’t really
argue with the logic of it, if the alternative is Option 1..., it might
be the way of the future. ...

Friday, September 21, 2012

The United States is caught in a vicious cycle largely of its own
making. Rising income inequality is breeding more inequality in
educational opportunity, which results in greater inequality in
educational attainment. That, in turn, undermines the intergenerational
mobility upon which Americans have always prided themselves and
perpetuates income inequality from generation to generation.

First, you’re going to have a hell of a hard time finding a job. ... But even when you get a job, it’s likely to pay peanuts. ... Presumably ... when we come out of the gravitational pull of the recession your wages will improve. But there’s a longer-term trend that should concern you.

The decline in the earnings of college grads really began more than a decade ago. ... Don’t get me wrong. A four-year college degree is still valuable. Over your lifetimes, you’ll earn about 70 percent more than people who don’t have the pieces of parchment you’re picking up today.

But this parchment isn’t as valuable as it once was. So much of what was once considered “knowledge work” ... can now be done more cheaply by software. Or by workers with college degrees in India or East Asia, linked up by Internet.

For many of you, your immediate problem is that pile of debt on your shoulders. In a few moments, when you march out of here, those of you who have taken out college loans will owe more than $25,000 on average. Last year, ten percent of college grads with loans owed more than $54,000. ... Loans to parents for the college educations of their children have soared 75 percent since the academic year 2005-2006.

Outstanding student debt now totals over $1 trillion. That’s more than the nation’s total credit-card debt. ... At some point in the not-too-distant future..., College is no longer a good investment. That’s a problem for you and for those who will follow you into these hallowed halls, but it’s also a problem for America as a whole.

You see, a college education isn’t just a private investment. It’s also a public good. This nation can’t be competitive globally, nor can we have a vibrant and responsible democracy, without a large number of well-educated people.

So it’s not just you who are burdened by these trends. If they continue, we’re all f*cked.

Monday, April 30, 2012

College graduates are struggling, and the "war on the young" is "doing immense harm, not just to the young, but to the nation’s future":

Wasting Our Minds, by Paul Krugman, Commentary, NY Times: In Spain, the unemployment rate among workers under 25 is more than 50 percent. In Ireland almost a third of the young are unemployed. Here in America, youth unemployment is “only” 16.5 percent, which is still terrible — but things could be worse.

And sure enough, many politicians are doing all they can to guarantee that things will, in fact, get worse. ... Let’s start with some advice Mitt Romney gave to college students..., “Take a shot, go for it, take a risk, get the education, borrow money if you have to from your parents, start a business.”

The first thing you notice .. is ... the distinctive lack of empathy for those who ... can’t rely on the Bank of Mom and Dad to finance their ambitions. ... I mean, “get the education”? And pay for it how? Tuition ... has soared... Mr. Romney ... would drastically cut federal student aid, causing roughly a million students to lose their Pell grants. ...

There is, however, a larger issue: even if students do manage, somehow, to “get the education,” which they do all too often by incurring a lot of debt, they’ll be graduating into an economy that doesn’t seem to want them. ... And research tells us that the price isn’t temporary..., their earnings are depressed for life.

What the young need most of all, then, is a better job market. People like Mr. Romney claim that they have the recipe for job creation: slash taxes on corporations and the rich, slash spending on public services and the poor. But we now have plenty of evidence on how these policies actually work in a depressed economy — and they clearly destroy jobs rather than create them. ...

What should we do to help America’s young? Basically, the opposite of what Mr. Romney and his friends want. We should be expanding student aid, not slashing it. And we should reverse the de facto austerity policies that are holding back the U.S. economy — the unprecedented cutbacks at the state and local level, which have been hitting education especially hard.

Yes, such a policy reversal would cost money. But refusing to spend that money is foolish and shortsighted even in purely fiscal terms. Remember, the young aren’t just America’s future; they’re the future of the tax base, too.

A mind is a terrible thing to waste; wasting the minds of a whole generation is even more terrible. Let’s stop doing it.

The comments divided relatively predictable ways, according to whether the commentor were inclined toward Republican or Democratic policies, but relatively little energy was given to the question of the value of higher education. Most people can appreciate the beneficial technologies will that depend upon the scientific training and research that goes on in universities, although not everybody recognizes the debt that society owes to higher education in such developments.

Higher education can mean more than learning about science or classical literature. My own first learning experience in higher education had little to do with a classroom. I found myself in contact with a much wider variety of people that I had ever previously encountered. That in itself broadened my perspective on life. Classes in history, as well as classical music and literature, helped to give me a sense of the life and culture of other parts of the world. My greatest benefit from higher education was a curiosity about the world that I had lacked before.

Let me turn for a moment to an observation about my field, economics. Many of the economists who other economists recognize for making the greatest contributions to their field are people who benefited from exposure to different fields. The winner of the not-really Nobel Prize, Kenneth Arrow, was trained as a meteorologist during the Second World War. Similarly, Nobelist Paul Samuelson worked with mathematicians, engineers, and physicists developing radar during the war. Phil Mirowski’s Machine Dreams is filled with such examples. Of course, scientists have gotten inspiration from similar experiences.

In short, education in general is not something that can be easily measured in objective terms. Ideas, which initially seemed kooky, often later turn out to be crucial for future development.

The me finish by saying that my complaints are not the product of some disgruntled academic, upset over low pay, mistreatment, or any other personal problems. I enjoy what I do. In fact, if I were willing to retire, I could teach half-time for a few years while collecting my pension. If I did, my income would increase but I can only do so [keep teaching] for five years. Consequently, I pay to keep teaching. I have good relationships with my chairman, my dean, and president of the University.

My anger is directed toward the forces that are working to destroy a world, which I love.

Wednesday, April 18, 2012

Better education may not be the answer to all of our problems, and it won't work for everyone in any case, but worse education is certainly a prescription for disaster. This is from Michael Perelman:

The Demise of Higher Education in the United States, Unsettling Economics: The United States has experienced two major growth spurts in higher education. In 1862, the Morrill Act changed the face of higher education will by granting each state 30,000 acres of public land for each senator and representative. Sale of the land was intended to create an endowment fund for the support of colleges in each of the states. Prior to the creation of the land-grant colleges, higher education was predominantly intended for wealthy students and those intending to serve as clergy. The land-grant colleges expanded higher education to different regions and a different class of students. This expansion, however, was still incomplete.

The second episode was the G.I. Bill, which was not so much intended to promote education, but rather to prevent another Bonus March, in which angry soldiers returning from the First World War demanded early payment of their promised bonuses to help cushion the hardships of the Great Depression. Offering education was expected to channel potential discontent.

The G.I. Bill paid a different kind of bonus. The doors of colleges and universities opened to people for whom higher education would have been out of reach. Their skills proved invaluable during the postwar economic boom. A second unintended bonus flowed from the G.I. Bill. To accommodate the massive inflow of students, colleges and universities built infrastructure to expand their capacity to handle so many students. After the wave of veteran enrollments dissipated, colleges and universities had to choose between letting this infrastructure sit idle or enrolling more students.

Judging from my experience teaching during the Vietnam War, returning these veterans must have made an important contribution to the teaching environment. Although many soldiers were unable to put their lives together after the trauma of war, some came back, totally focused on making something of themselves. Some of their maturity and dedication rubbed off onto the younger cohort of students.

A less dramatic burst of government spending into education came from the National Defense Education Act of 1958, which was a response to the USSR’s launch of Sputnik, the previous year. This time, much of the money was narrowly focused on improving the quality of science and language education.

I have personally experienced the rise and fall of higher education in the United States. I enrolled at the University of Michigan in 1957, a few months before Sputnik was launched then, in 1965, I enrolled in graduate school at the University of California, Berkeley. This was a time of great optimism about the future. I did not realize that very hard times for higher education were about to begin.

As the student population swelled during the 1960′s, the youth culture developed as a result of demographic changes, the Vietnam War and skepticism about consumptionism clashed with a different kind of pressure: a sagging rate of profit, following decades of unparalleled prosperity.

Under these conditions, the goal became to reverse the gains from the G.I. Bill. Rather than including people in education, who might otherwise threaten the status quo, reining in the University system seemed urgent. In the fall of 1970, Governor Reagan’s aide Roger Freeman, who later served as President Nixon’s educational policy advisor, while he was working at the time for California Governor Ronald Reagan’s reelection campaign, commented on Reagan’s education policy: “We are in danger of producing an educated proletariat. That’s dynamite! We have to be selective about who we allow to through higher education. If not, we will have a large number of highly trained and unemployed people.”

In 1971, just before he was nominated for the Supreme Court, Lewis Powell, a corporate lawyer wrote a now-famous memo, “Attack of American Free Enterprise System” for the Chamber of Commerce. Higher education appeared to be at the heart of this attack on free enterprise. He described how the Chamber could gain more control over the educational system.

Although the memo was superficial at best, it sparked great interest among the elites, influencing or inspiring the creation of the Heritage Foundation, the Manhattan Institute, the Cato Institute, Citizens for a Sound Economy, Accuracy in Academe, and other powerful organizations. ...

Tax reduction ... also had an important effect on education. Growing budget deficits would ramp up pressure to privatize what had been previously public responsibilities. By largely defunding education, universities became increasingly dependent on corporate money. Administrators became cautious about allowing expression of ideas that might seem upsetting to business. These factors took an enormous toll on higher education.

Tuition began a rapid ascent. Student debt accumulated. University funds were concentrated on programs that cater to business needs, such as biotechnology and engineering, and, naturally, business schools. Visiting Berkeley, I am always struck by the lavish libraries for biotechnology and business, while the other disciplinary libraries were unchanged. The one exception that stood out was public health, which was torn down to make way for a new biotech building and then moved to the basement of an old administrative building.

The educational assembly-line that Mario Savio described during the Free Speech Movement at Berkeley has changed, but not for the better. At the same time, leaders in business and politics insist that education is an essential element to a successful economy. Nonetheless, education becomes increasingly unaffordable, at the same time that the quality [is declining]...

Thursday, April 05, 2012

Ari at The Edge of the American West wonders if juiced academics are just around the corner, and the competitive implications if they are:

Dopers, by ari: This article in Vanity Fair left me thinking that it’s only a matter of time before performance-enhancing drugs become the norm rather than the exception in the academy. I mean, what happens you realize that the assistant professor that your department just hired can concentrate for hours and hours without taking a break for weeks on end? What happens when you realize that s/he is far more productive than you are because of these extraordinary powers of concentration? And then, what happens when you learn that the secret to her or his success is a prescription for methylphenidate? What are you going to do about it*? As for me, I’ll probably go out for a bike ride and then take a nap. But that’s because I’m old and pretty much past my prime already. But if I could still be a contender — whatever being a contender means — I wonder if I’d think twice and call my doctor. ...

Now wait, before you give the obvious reply, yes, I know this already happens. Eric drinks coffee. I don’t. And that’s the only reason he’s written four books and I haven’t. Really, though, if there were a pill that would allow me to be significantly more productive, I worry that I’d think long and hard about taking it. Actually, I suspect that choice is already here. It’s just that I don’t have the right dealer. ...

Sunday, March 11, 2012

Slow day so far in terms of finding or thinking of things to post -- maybe this will spark some discussion:

... Because of the bitter competition for ... premium salaries, elite educational credentials are often a precondition for even landing a job interview. With so many applications for every vacancy, many consulting firms and investment banks, for example, now consider only candidates from a short list of top-ranked schools.

Degrees from those schools clearly open doors. For example, more than 40 percent of the 2007 graduating class at Princeton landed one of the most highly sought prizes: a position in the lucrative financial services industry.

Universities have responded vigorously to escalating student demands for elite degrees. Their main strategy has been to bid more aggressively for the most distinguished researchers, which explains not only the rapid salary growth for top faculty members in the last several decades, but also the fact that teaching loads at many elite schools have decreased...

Yet no matter how much universities might spend in pursuit of elite status, only 10 percent at any moment can end up in the top 10 percent. To be sure, the additional expense has not been pure waste. ... Researchers have responded as expected to these incentives. But the additional papers they’ve written have added little value. The economist Philip Cook and I found, for example, that in the first five years after publication, many fewer than half of all papers in the two most selective economics journals had ever been cited by other scholars.

Tying federal subsidies to tuition growth would dampen a university’s incentive to bid for prestige in much the same way that league-imposed salary penalties in professional sports help curb the bidding wars for superstars. But if the starting-salary gap keeps widening between the highest- and lowest-paid college graduates, this remedy’s effectiveness would be temporary at best.

We might consider taking more direct aim at the component of tuition inflation that is attributable to growing salary gaps. Raising taxes on top salaries would be a good idea for American society in general, and not just for higher education. It would not only shrink the effect of salary disparities, but would also generate some much-needed revenue.

If you were all powerful, what would you do to improve higher education?

Friday, March 09, 2012

Ignorance Is Strength, Paul Krugman, Commentary, NY Times: One way in which Americans have always been exceptional has been in our support for education. ... But now one of our two major political parties has taken a hard right turn against education, or at least against education that working Americans can afford. ... And this comes at a time when American education is already in deep trouble.

About that hostility: Mr. Santorum made headlines by declaring that President Obama wants to expand college enrollment because colleges are “indoctrination mills” that destroy religious faith. But Mr. Romney’s response to a high school senior worried about college costs is arguably even more significant...

Here’s what the candidate told the student: “Don’t just go to one that has the highest price. Go to one that has a little lower price... And don’t expect the government to forgive the debt that you take on.” ...

Mr. Romney’s remarks were even more callous ... given what’s been happening lately to American higher education. ... Adjusted for inflation, state support for higher education has fallen 12 percent over the past five years, even as the number of students has continued to rise... The damage these changes will inflict ... should be obvious. So why are Republicans so eager to trash higher education?

It’s not hard to see what’s driving Mr. Santorum’s wing of the party. His specific claim that college attendance undermines faith is, it turns out, false. ... But what about people like Mr. Romney? Don’t they have a stake in America’s future economic success, which is endangered by the crusade against education? Maybe not as much as you think.

After all, over the past 30 years, there has been a stunning disconnect between huge income gains at the top and the struggles of ordinary workers. You can make the case that the self-interest of America’s elite is best served by making sure that this disconnect continues, which means keeping taxes on high incomes low at all costs, never mind the consequences in terms of poor infrastructure and an undertrained work force.

And if underfunding public education leaves many children of the less affluent shut out from upward mobility, well, did you really believe that stuff about creating equality of opportunity?

So whenever you hear Republicans say that they are the party of traditional values, bear in mind that they have actually made a radical break with America’s tradition of valuing education. And they have made this break because they believe that what you don’t know can’t hurt them.

Sunday, March 04, 2012

The Indoctrination Myth, by Neil Gross, Commentary, NY Times: THE Republican presidential candidate Rick Santorum recently ... called colleges and universities “indoctrination mills” for godless liberalism. But is this true? Does attending college actually make you more liberal and less religious? Research indicates that the answer is: not so much.

It’s certainly true that professors are a liberal lot and that religious skepticism is common in the academy. ... But contrary to conservative rhetoric, studies show that going to college does not make students substantially more liberal. ... Studies also show that attending college does not make you less religious. ...

I've always thought this is more about discrediting academic voices than the supposed indoctrination itself. The author gets this:

So why do conservatives persist in attacking higher education? There’s no doubt that in terms of overall curricular content and campus culture, most colleges and universities do skew more to the left than to the right. And research by the sociologists Amy Binder and Kate Wood confirms that this can be a frustrating and alienating experience for conservative students, even if it’s not serving to indoctrinate anyone.

But that alone doesn’t explain the intensity of the animus. Doing so requires some historical perspective. Conservatives have been criticizing academia for many decades. Yet only once the McCarthy era passed did this criticism begin to be cast primarily in anti-elitist tones: charges of Communist subversion gave way to charges of liberal elitism in the writings of William F. Buckley Jr. and others. The idea that professors are snobs looking down their noses at ordinary Americans, trying to push the country in directions it does not wish to go, soon became an established conservative trope, taking its place alongside criticism of the liberal press and the liberal judiciary.

Academics provide a powerful counterforce to conservative ideas, both through evidence and argument, and to the extent those voices can be discredited, it benefits conservatives. At least politically. But there is a danger in this as well. Discrediting professors as out of touch, elitist, individuals discredits the entire institution of higher education, and this undermines our pursuit of basic science and education that will be needed to compete in a globalized economy (e.g. by making taxpayers less willing to fund these institutions). Most of the academics I know don't have a political bone in their body, and if they do it does not affect their research in any way. They simply want to find the truth, and discrediting the entire institution of higher education to mute the few who do speak out reduces our ability to solve important problems.

Tuesday, January 31, 2012

Gains and Gaps: Changing Inequality in U.S. College Entry and Completion, by Martha J. Bailey, Susan M. Dynarski, NBER Working Paper No. 17633, December 2011: [open link] We describe changes over time in inequality in postsecondary education using nearly seventy years of data... We find growing gaps between children from high- and low-income families in college entry, persistence, and graduation. Rates of college completion increased by only four percentage points for low-income cohorts born around 1980 relative to cohorts born in the early 1960s, but by 18 percentage points for corresponding cohorts who grew up in high-income families. Among men, inequality in educational attainment has increased slightly since the early 1980s. But among women, inequality in educational attainment has risen sharply, driven by increases in the education of the daughters of high-income parents. Sex differences in educational attainment, which were small or nonexistent thirty years ago, are now substantial, with women outpacing men in every demographic group. The female advantage in educational attainment is largest in the top quartile of the income distribution. These sex differences present a formidable challenge to standard explanations for rising inequality in educational attainment.

There's a more extended summary of the results in the conclusion to the paper.